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Continued from page 3

Bhargava claims to be the richest Indian in America—a title that officially belongs to Silicon Valley venture capitalist Vinod Khosla—but trying to untangle Bhargava’s business structure requires a 24-pack of 5-Hour Extra Strength. He could well be worth much more than Khosla’s $1.3 billion. Living Essentials’ closest comparable public company, energy drink giant Monster, trades at over 30 times earnings, making Bhargava easily a multibillionaire on paper.

But Bhargava claims to have given away $1 billion in 2009, with a letter to FORBES from his attorney, David Lieberman of the Michigan firm Seyburn Kahn, to back him up. Tax returns of Bhargava’s U.S. charity, the Rural India Supporting Trust, suggest a different narrative. Virtually the entire donation was in the form of a 45% stake in the privately held Living Essentials. Only a few million dollars was in cash.

Rural India then sold that 45% stake to Nevada 5, a private for-profit company. In exchange, Rural India got a note worth $623.6 million. Bhargava’s accountant Paul Edwards of Plante Moran says his client is not a beneficial owner in Nevada 5—but another one of his associates says it is a vehicle for Bhargava’s philanthropy and affiliated with Innovation Ventures, the parent company of Living Essentials.

This kind of deal raises questions, says Roger Colinvaux, professor at Catholic University’s Columbus School of Law and an expert on tax and philanthropy. “If it were a private foundation, it would be prohibited from selling to a company re­lated to a major donor.”

Rural India itself appears not to be giving much away. It lists total grants paid out in 2010 of just $4 million off a total asset base that by the end of that year had been stepped up to just over $1 billion. Bhargava can get away with this because he set up Rural India as something called a supporting organization, or a group that financially supports other charities. Unlike a traditional private foundation, a supporting organization has no mandated 5% minimum outlay, pays no excise taxes on investment income and has fewer self-dealing restrictions. Bhargava is not doing anything illegal here, just exploiting a loophole in the tax code many other big philanthropists have used as well.

Iowa Senator Chuck Grassley has been going after supporting organizations since 2002. “This structure permits a donor to donate assets to a charity, which then lends them back to the donor,” Grassley says. “This results in huge tax breaks for the donor with very little money actually going to those in need.”

The primary recipient of grants from the Rural India Supporting Trust is an organization called the Hans Foundation, which works to improve the lives of India’s most needy. Hans sends surgeons to combat epidemic levels of cataracts among the rural poor and devotes much-needed funds to women’s health care. A staff of 12 travels India looking for schools and hospitals to adopt rather than build from scratch. “We don’t do the work, but we have money,” Bhargava says.

Bhargava was originally vague and slightly taciturn when asked about the name of the foundation, describing Hans only as a former teacher, now dead. Only later, after much questioning, did he identify Hans as a guru called Shri Hans Ji Maharaj, spiritual leader of the Hanslok ashram where Bhargava spent those years pursuing a life of discipline as a monk. Bhargava talks of his monk days nonchalantly, accompanied by a characteristic dismissive shrug. “It’s a personal thing,” he says. “I don’t want to be a Jehovah’s Witness here proselytizing.”

With 5-Hour now growing smoothly, Bhargava is on to the next thing—or three. He’s put most of the $100 million behind Stage 2 Innovations, a Detroit tech venture fund that’s already invested in clean engines, hydroponic farming and water desalination. To run Stage 2 Bhargava hired former Chrysler Group CEO Tom LaSorda, a barrel-chested auto industry veteran as gregarious as the slight, bespectacled Bhargava is reticent. Bhargava wooed LaSorda over a $12 plate of pasta under the dusty grapes hanging from the ceiling at Antonio’s.

“I said, ‘Hey, if you find any technology, bring it to me,’” says Bhargava. The fund’s first investment is in Hybrid60, a hydraulic engine technology that aims to increase fuel efficiency by 60%. LaSorda is testing it on trucks right now and eventually hopes to sell the technology to customers such as his billionaire buddy Roger Penske, who could retrofit his 225,000 rental trucks, the largest fleet in the U.S.

Across the room from their tester Penske truck LaSorda and Bhargava look approvingly at their other project: an indoor, software-controlled farm. Tiny basil plants are growing inside 12-foot-by-12-foot containers that look like giant tanning beds covered in tinfoil. Rows of lilac lights bathe the trays of basil, each pot fed the perfect amount of nutrients at the right pH level. It hums like an air-conditioning unit, a trickle of water barely audible. In two weeks each sapling will be exactly 8 inches tall. The hydroponic startup has set up 500 more of these farm fridges, which do the work of 500 acres of land, in another unused building Bhargava bought on Detroit’s outskirts. He thinks this invention could change agriculture in drought-prone Middle Eastern and African countries.

LaSorda says he has found himself having to explain who his mysterious partner is on more than one occasion. “The reaction I get is ‘Who’s this guy?’” LaSorda says. “Then I say, ‘The 5-Hour Energy guy,’ and they say, ‘Oh, sh--, he must be killing it.’ I say, ‘Yeah, he is.’”